Company trading outpost

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Explain how the choice of Singapore as the location of an East India Company trading outpost was more of circumstance than of design. Would you say that also about the subsequent growth of the outpost as one of the Straits Settlements?


In the 21st century, Singapore is an economically stable and vibrant country, and it is one of a global player today. There is certainty a good number of factors behind the rapid growth of Singapore as it has emerged from a sleepy small fishing port to a global center in less than two centuries after founded as a trading outpost of the East India Company (EIC) in 1819.

However, to understand the present, we must look at our past. We have to explore the reason of why Singapore was chosen by the East India Company as their trading outpost, and not other neighboring countries in the same region. In the first part of this paper, we are going to discuss if the choice of Singapore as an East India Company trading outpost was more of circumstance than of design. In the second half, we will continue our discussion if the subsequent growth of Singapore is also more of circumstance than of design.

Why the formation of EIC?

The East India Company, EIC was set up in 31 December 1600 by the British Merchants who received a royal charter from Queen Elizabeth I. Under this charter, EIC has granted a monopoly of trade between England and all places lying between the Cape of Good Hope and Cape Horn. As this is a royal charter, it forbids other parties other than EIC to enter into trade. The EIC set up ‘factories’ in India, headquartered in Calcutta. The reason being Calcutta is at the middle of a basin where the river enters the sea and accessible to both land and sea trade. The EIC also managed and exercise political functions as well in India.

The reason for monopoly is because of trading with the East was a lucrative business. There was high demand for merchandise from the East. The West was relatively backward than the East from the 13th century to early 18th century. Hence, products like silk, porcelains, cottons, fine steels, jewels, ivory and etc. were very popular with the westerners. The demand for spices from India and Southeast Asia to make meat palatable was especially high as these spices are only available in the East due to the geographical location. The EIC was formed to share in the East Indian spice trade. This trade had been a monopoly of Spain and Portugal until the defeat of the Spanish Armada (1588) by England gave the English the chance to break the monopoly. The British were also interested in trading with China for their textile and tea as China was more advanced then. Therefore, EIC was formed in 1600.

Who are the main traders with the East?

During the 13th to 14th centuries, Venice and Genoa were the main players of trade with the East (with Venice monopolizing the sea route and Genoa, the land trade). The Indian and Pacific Oceans were previously barriers that prevented Europe from direct contact with India and Southeast Asia. Only in the 15th century, the westerners found a new way of reaching India through the Cape of Good Hope. This new insight clearly benefited countries like England, France, Holland, Portugal and Spain which all faced the Atlantic. The new founding had broken the Venetian monopoly through the Mediterranean.

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